April retail sales suffer worst decline on record
Shelter orders hit stores, particularly clothing, hard
April saw the worst monthly decline in U.S. retail sales on record, reflecting the impact of the coronavirus pandemic as shelterinplace orders spread throughout the country and consumers pulled back on spending.
Retail sales dove 16.4% in
April compared with March, according to a Friday report by the Census Bureau. April numbers nearly doubled the 8.3% monthly drop from February to March and marked the worst monthly setback recorded for the industry since the agency started tracking sales figures in 1992. Sales plunged 21.6% compared with
April 2019.
March had already set a dismal record for an annual decline, even though restrictions on business openings — first imposed in the Bay Area, then in California and many other regions and states — were only in place for part of the month.
“We’re going to have to get creative with our social media channels to retain and attract new customers.”
Ron Benitez, coowner of Asmbly Hall
Bay Area health orders that took effect March 17 shut down businesses deemed nonessential, like clothing, toy and furniture stores, bookstores, art galleries and more, in an effort to curb the spread of the virus. As California and other states, cities and regions followed, furloughs and permanent job cuts have risen sharply. Some 36.5 million Americans have filed claims for unemployment benefits over the past two months, including 4.2 million in California. In the Bay Area alone, more than 110,000 layoffs have been reported, and many more are likely out of work. Before the pandemic, roughly 1 in 12 Bay Area workers were employed in the retail sector.
Clothing and accessories stores took the biggest hit in April, with sales falling 78% from the previous month and 89% year over year in April. San Francisco’s Gap Inc. furloughed a majority of its retail staff and stopped paying rent on its stores in April, a sign of the pain retailers both large and small felt. The company recently said it plans to slowly reopen stores across the country by the end of May. Three major retailers have filed for bankruptcy during the pandemic — J. Crew, Neiman Marcus and J.C. Penney.
Other retail sector sales didn’t fare much better. Electronics and appliances sales declined by 60%, furniture and home furnishing saw a 59% drop, sporting goods were down 38%, and bars and restaurants plummeted by 29.5%.
“April was our first full month of assessing where things really stood,” said Adam Smith, owner of Fog City News, a downtown San Francisco newsstand that also sells chocolates and greeting cards. The store, which recently celebrated its 20th year in business, saw revenue decline by 75% last month. Smith said he was able to cancel some inventory orders, avoiding the expense of goods he could not sell.
Consumers are spending less on luxury items and more on essentials like food, said Nicole DeHoratius, a professor at UCLA Anderson School of Management who specializes in retail operations management, in an email.
Even before the pandemic, one of the biggest challenges facing brickandmortar retailers was consumers’ ongoing shift to online shopping and ordering. Nonstore sales — mostly ecommerce — rose 8% from March and 22% from April 2019, when online stores began to show short supply and long shipping times as demand rose swiftly. For smaller businesses that had not made the online leap, the lack of web sales stung.
“The pandemic has accelerated the need to have these digital capabilities in place,” DeHoratius said.
That was a reality for Ron Benitez, who coowns Asmbly Hall, a San Francisco clothing seller, with his wife. During the pandemic, they closed their store on Fillmore Street after nine years. His other location, on Divisadero Street, is open, but only for ecommerce.
“Much of the decision to close the store resided in the pandemic and how challenging the road to recovery might be, so we decided to make our footprint smaller and start all over,” Benitez said.
Revenue declined from a monthly average of $30,000 before the midMarch closure to $2,000 in the weeks since then, Benitez said.
“We had online sales but nothing would make a dent.
We’re truly a brickandmortar store and we emphasize an experience, but we’re looking more closely at ecommerce.”
Businesses are slowly starting to reopen but a retail rebound is unlikely to be seen for many months.
“Now that we’re in midMay, many businesses are already starting to reopen. Relief payments and pentup demand should provide some degree of postshutdown rebound, but spending will be far from normal and may be choppy going forward,” Jack Kleinhenz, chief economist at the National Retail Federation, said in a statement. The Washington trade group noted that the industry had been seeing record growth before the pandemic.
For Benitez, who has received federal financial assistance and is trying to work out rent woes with landlords, that means switching to selling coronavirus essentials. He’s planning on selling colorful cloth masks in addition to the wide array of clothing for men and women available at his boutique. As optimistic as he is, he still fears business won’t bounce back anytime soon, even with the city allowing retail businesses to reopen on Monday for curbside pickup of goods.
“Curbside is something, but it’s not sustainable longterm. It will take us quadruple the time it took us to close to have customers come back in,” he said. “We’re going to have to get creative with our social media channels to retain and attract new customers.”